U.S. Industrial Production is Unexpectedly Weakby Tom Moeller October 18, 2010

Momentum previously evident in industrial output growth has been lost.
That's again the message from the report on production which fell last
month. The decline compared to an expected 0.2% gain, and reversed an
unrevised 0.2% August increase. Moreover, tepid performance during
the last two months stand in sharp contrast to increases between 0.5% and
1.5% extending back to July of last year. Lost momentum is clear in
output's three-month growth rate. It's fallen to 2.6% from its peak
of 14.3% one year ago. Some of the slowdown was to be expected
following the usual spurt in output following a recession. The difference
between the recent slowdown and others, however, is that initial gains
coming out of recession were less substantial than others in terms of
magnitude and duration. Following the 1981-82 recession, for example,
industrial production grew at a double digit rate for roughly one year
before decelerating.

Capacity utilization overall ticked lower to 74.7% but remained well above
last year's low of 68.2%. A 74.8% September rate had been expected. The
factory sector utilization rate, alone, slipped to 72.2%. The increase
here is from the low of 65.4% during the recession. But the figures
continue to paint a picture of abundant unused productive capacity. The
latest rates compare to roughly 80% just before the recession and a fifty
year average also of 80%. Industrial production and capacity data are
included in Haver's USECON database, with additional detail in the
IP database.